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Assembly to mull stance on surgery center

A recent announcement by the Kenai Peninsula Borough Assembly has added a new wrinkle to the debate over whether a group of area surgeons should be allowed to build a proposed surgery center in Kenai.

On Tuesday, assembly President Gary Knopp announced the assembly would seek to comment on Kahtnu Ventures’ proposal to build an 8,365 square foot, $9 million ambulatory surgical center in Kenai.

“It will not be neutral, it will be in opposition to your venture,” Knopp said Tuesday while addressing Jim Zirul, a local ear, nose and throat surgeon and one of the founding members of Kahtnu, and Henry Krull, a Soldotna based orthopedic surgeon also associated with the project.

“But, I say that, because it has to say something,” Knopp added. “I can say it is with great reluctance that we even bring it forward as we choose not to comment on private ventures. But it is incumbent upon us as the caretakers of the hospital since we do own it. The borough owns it and we represent the people.”

Knopp said the borough would seek public comment on the issue at its Jan. 17 meeting and would submit a letter to the state on the proposal from the results of the comments.

The Alaska Department of Health and Social Services is currently soliciting comments on the proposal through Jan. 23 and will host a public hearing on the matter at 5 p.m. Jan. 19 at the Challenger Learning Center in Kenai.

“I can tell you that I don’t think a person up here has got a mind made up about it,” Knopp added, speaking of the other assembly members. “The purpose of the ordinance is not to oppose your project, it is to get the information out there to ourselves and to members of the public.”

The surgery debate

Kahtnu consists of eight surgeons all associated with Central Peninsula Hospital, who hope to build the facility in downtown Kenai by the spring of 2013. Kahtnu filed for a Certificate of Need with the state in September, but its initial application was denied because it was considered incomplete.

At the time, CPH officials said none of the hospital’s surgeons took ownership of the proposal, but Zirul maintains he and others have been pitching the idea since the mid 1990s, most recently at a June Central Peninsula General Hospital Inc. board meeting.

Zirul and Kahtnu members contend the surgery center — which will house outpatient surgery facilities currently available locally at CPH — will lower the cost of surgeries through efficiencies not afforded to hospital patients.

CPH officials contend the surgery center would pull away one of the more profitable aspects of the hospital, possibly resulting in layoffs and decreases in other, less profitable service lines.

In early December, CPGH Inc. board President Lore Weimer said the two sides had formed a “spirit of collaboration.”

However, a Jan. 3 press release from the hospital called for residents to oppose the surgery center.

“I think they would like it for us to think it was a good idea to have a surgery center and want to partner with them,” Weimer said of Kahtnu. “But, at this point, in our town, with the numbers we have and the services we offer, what we see is the potential for them to be able to (take) a damaging chunk of our outpatient surgery. That would decrease revenues at the hospital and cause us seriously to look at cutting back some services.”

Zirul said if the hospital doesn’t participate in the project, it could leave their operations isolated, causing problems as demand rises and the community grows. He said it would be “much more beneficial” for the hospital to spread out to other areas in the long run.

“As far as this group is concerned … we still believe that collaboration with the hospital and the hospital participating in this venture is mutually beneficial in the long run for both organizations,” he said. “We feel that the surgery center will bring in more patients into the community that would otherwise leave to have outpatient procedures performed in Anchorage. If you (keep) those patients in the community, they will use the hospital for their other services.”

CPH Chief Executive Officer Rick Davis said the hospital is estimating annual losses up to $20 million from surgery charges from a total $150 million the hospital realizes in total charges among all services if the surgery center is built.

The hospital performed about 2,500 total — inpatient and outpatient — surgeries in 2010, Davis said. Of those surgeries, about 1,700 were outpatient.

Davis said CPH regularly does business with 12 to 15 surgeons. A total of 8 surgeons have signed on so far with Kahtnu Ventures.

“But, they are not going to be taking all of their business out of here,” Davis said.

“It is something we don’t feel is necessary or beneficial to our community,” he added. “It is not that we are not wanting to collaborate with our doctors, we just don’t want to partner with them on a surgery center.”

In a document outlining the Kahtnu proposal, the group claims surgery centers typically charge one-half to two-thirds less for the same procedure performed in a hospital setting.

“With the growing population on the Peninsula and the growing number of surgical specialists, there is an identified need for an additional outpatient surgery operating rooms as the availability of operating rooms for both inpatient and out patient surgeries at CPH has diminished,” the outline reads.

Davis said CPH’s fourth operating room — one previously approved by the state — will likely open in May. The three current surgery rooms are at 80 percent capacity, but when the fourth is opened, CPH will be at 65 percent surgical capacity.

“It doesn’t mean that 80 percent of the time your (operating room is) full, it is that you are doing 80 percent of the minimum number of cases the state will approve a new OR based on,” Davis said.

Davis added that after the fourth room is opened, the state would likely not approve a fifth by “quite a long way.”

“According to our CON consultant, we are good through 2019, based on his estimate,” he said.

The government’s role

Assembly member Bill Smith said Kahtnu’s proposal came up during committee discussions on Tuesday, but added the body didn’t want to take a position on it until members heard from the public.

The assembly — which has a heavy hand in many larger decisions CPH makes and represents constituents in the service areas taxed for the hospital’s benefit — is likely leaning against the proposal, Smith said.

“If the assembly doesn’t take a position, basically we are not protecting the assets,” he said. “At this point, I think it is incumbent upon the assembly to voice concerns about the assets the service areas have created with their taxes.”

Smith said surgery centers are common in many other areas, specifically in the Lower 48. The state has created the CON application to protect the interests of hospitals, particularly in rural areas, he said.

“The idea is that there are certain, pretty profitable things hospitals do and a lot of things that are not profitable,” he said. “What the state has done is create the Certificate of Need system in order to see, especially rural hospitals, that we’re somewhat protected from someone skimming the cream off the top of the health care services.”

According to the state’s website, the CON program is a “review process used to promote responsive health facility and service development, rational health planning, health care quality, access to health care, and health care cost containment.

“Project reviews help ensure that the public will be able to comment on the project during its development, that it fits well within the continuum of care, and that the project will meet the public need while preventing excessive, unnecessary, or duplicative development of facilities or services.”

Zirul thinks the borough assembly is in a difficult spot — finding a balance between protecting its hospital and allowing for economic development. By opposing the center, he said they would be making a “very loud statement.”

“The borough also has the responsibility to allow for economic opportunity within the borough,” he said. “The surgery center will provide tax dollars to both the borough and the city of Kenai because it is a for-profit.”

“In a way, the borough is suppressing economic activity and when you look at it in a broader sense,” Zirul said. “It is not only just not agreeing with the CON for a group of surgeons that want to build a surgery center, there are all those practices in the area … that if the hospital decides to do a project and build like a medical office space they are now directly competing with those other physicians in other facilities in that area that are private.”

Krull agreed, adding he perceives the borough to have a conflict of interest in possibly opposing free enterprise.

“I understand the borough’s responsibility, the borough owns the asset and the asset is the hospital,” he said. “I understand what they are saying when they say they have to oppose anything that threatens their asset.”

However, Krull added, the borough assembly has a “duty of loyalty to their constituency,” as well.

“I don’t know frankly how they can approach this issue and manage all of these responsibilities,” he said.

Karen Lawfer, health and social services planner for the state, said the borough assembly’s comments would hold the same weight as the rest of the comments received. However, the state would also take into account the borough’s — and Kahtnu’s — involvement in local health care planning for services and public accountability.

“And there will be review to see how this health care facility has been involved in the planning process in the community,” she said.

Zirul said he would recommend the assembly take a neutral stance on the issue and let the state decide if the CON was needed for Kahtnu to proceed.

Weimer said she agreed with the assembly’s decision to comment. She said such a decision would re-enforce the community’s wish — expressed during the exploration of a whole hospital joint venture — to have a strong, local hospital owned by residents.

“Having a resolution from the assembly shows that the people who are representing their constituents believe that the hospital is providing sufficient resources to take care of the needs of our patients well,” she said.

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Surgen owned surgery centers that have been built around here where I live now were accepted with open arms until the loss of revenues hit home to the surrounding Hospitals. The cost to the hospitals have been into the millions for lost services,patients etc. It is having a severe spiral monetary effect on hospitals in our areas now. Good Luck.

So CPH management is saying that even with their publicly funded facility it cannot compete with a private surgery center? Typically, I thought it was unfair to use public money to compete with private businesses. Our Assembly believes the reverse is true. How odd.

I imagine they do not support public funded health care either, such as was passed by Congress, except, of course, for anybody but them.

Mon. 1/9/2012
YES I have a great deal of RESPECT for OUR Hospital here in Little Ole Sloooooooowdotna,Alaska BUT

They do have a History of Charging Above & Beyond the Usual & Customary Fees for Medical Services.
& a History of writing a Billing Statement that No One can understand. They do NOT want You to understand what services that You are paying for cuz If You could understand the Billing then You could challenge the amounts being Charged to You. Keep Em Confused ! is their motto .

YES a Independent Surgical Suite would provide another
option for the Patients & then MAYBE the competition would
lower the Costs for the Patients ?

Question ? Will this New Business be accepting MediCare Patients & Veterans ? Anyone got a Answer to that Question

Mr Airborne, I could not imagine any business that has such a narrow specialty not accepting Medicare or VA patients. That would be a death blow for them right off the bat and the investors would be out of all of their start up capital.

Is it possible that CPGH Inc. has our hospital in a situation that cannot tolerate lower-cost competition, and that CPH surgeries are being used to subsidize other, less-profitable specialties?

If such is the case, why doesn't CPGH Inc. see to it that our area has a full-service Hospice?

I wonder whether CPGH Inc., under the influence of past administration, hasn't made some unwise decisions concerning growth of CPH services by bringing in too many exotic specialties, placing CPH in a precarious position regarding competition, and ignoring the area's more pressing needs?

Area residents are facing terminal illnesses without the benefit and support of a full-service Hospice. A full-service Hospice provides specialized care services (patient care including symptom management, emotional support, spiritual support and psychosocial intervention), addresses issues most important to the patient’s needs and wants at the end of their life focusing on improving the individual’s quality of life.

Our current, volunteer Hospice does the best they can with their limited capabilities. A full-service Hospice could do much better, and CPH is the logical provider.

So what choice do think you will be getting? You will have the same surgeons, as you have at CPGH and IF you have the courage to demand your surgery be performed at the hospital ( They won't ask you but will just schedule it at their OWN facility) Then you give the decision to the PHYSICIAN if they want to do the surgery at the hospital (cutting into their profits) And yes the surgeon CAN and will decide if they will do the surgery. Let's face it, this is a business and all the physicians are in it for the profit. Ya sure they can say they won't do this now but once this business is open they can do WHATEVER they please as there are no reporting mandated on them no watchdog like JCHAO they don't have to report anything so now your stuck with the cold hard fact that you fell for more snazzy foot work politics and the burden of the choice falls on the shoulders of the community.

Do you really think the surgeons are going to be able to afford the best technology and equipment over time?? They will open strong but what about 5 years down the road? How will they pay for it? Out of their own pockets when they have now created their own monopoly?

To spright: Talk about "charging above and beyond reasonable" I have two children that both require specialty care not offered in our area and I have had surgery at a surgeon owned surgery center as well as MULTIPLE visits to all CPH's services including surgeries so you could say this ain't my first rodeo and that I have a very broad range of experiences. So I call bull on your comment singling out CPH. everyone of my doc bills from all anchorage docs were denied by my insurance sighting " charges above reasonable and customary"

Tue 1/10/12
I am sincerely Sorry that Your Family must endure Surgeries & speciality care. I really Hope that proves to be successful for You & Your Family are Better.

The point of my message is for the Patients to make the time to read & understand the Billing Statements that they receive from Our Hospital & to challenge the charges that they know to be Wrong. Ask for a Detailed Invoice & ask Questions about charges that You don't understand.

My most recent experience was that i recieved a Billing from the Hospital & even the Cashier at the Hospital could NOT explain What I was being Billed for ?
The Billing was so complicated that No One could understand it. No One could translate into Layman's Terms
what the Patient was being billed for.
Finally after Layer after Layer of B S & confusion & being passed from one Dept to another. The Director of the Business Dept explained that Bill was for a Ultra Sound Treatment So WHY didn't they say so in the 1st place ?
WHY make the Billing so complicated ?

It is the Patient's Responsibility to Ask Questions & to Keep Them Honest.
Thanks for Listening Retiree SPW in Slooooowdotna

Folks, Regarding the purchase of new medical equipment. Their is a hospital in Forest Lake, Mn who had as a benefactor a Washington D.C. lawyer who was an expert in writing up grant proposals. This hospital has all of the newest and latest equipment at no cost to them even had new rooms and additions built to house it, They like to call themselves the Northern Mayo Clinic. Also our Medicare funds have went to pay for 1,000's of CAT scan machines at $750,000 each around the country to the point that virtually none of them are making a profit since you can drive about 10 miles and get it there. I would assume this proposed facility would have the best equipment even if they have to purchase it themselves in order to stay current and attract future business. Maybe this should be allowed to go forward and let the patients decide where they want to go to have their surgeries performed. If all of the employees of the hospital have to take a 5% pay cut then so be it they can always quite and go somewhere else. The rising costs of medical care have to undergo a huge adjustment anyway.

Cheapersmokes:
Are you freaking kidding me with this? "If all of the employees of the hospital have to take a 5% pay cut then so be it they can always quite and go somewhere else. The rising costs of medical care have to undergo a huge adjustment anyway."

Do you work? maybe we should just Say ANY kenai/soldotna/Sterling person that is employed should take a 5% cut in pay! Your comment is asinine at best.

If this surgery center opens there will be many jobs lost, will YOU cheapersmokes hire them? Where do you expect they will go to get a job?

This is OUR hosptial WE the people have a say, we DO make a difference this point has been proven time and time again.

As a health care professional for the past 20 plus years and former Owner/Operator of for-profit healthcare operations, I would strongly urge the community to support Kahtnu Ventures, LLC.

Whenever there are options in health care, the bar is raised in the level of care being offered. That is something I would like to see. I am tired of not having choices and paying more than "usual and customary" for care.

Why would we oppose these fine surgeons in their effort to be run their own business as they see fit? Perhaps there are things going on with a board run hospital that makes it difficult to work at CPGH?

I am appaled at the fear mongering propaganda that the hospital has taken, large newspaper ads and mailers to resident mailboxes? Who do you think is paying for that? We are! They are trying to scare us with rhetoric about paying taxes if this goes through...how are they funded now? I call on them to be transparent on this.

Write a letter to the state and attend the public hearing to support free enterprise and quality health care in our community!!